WASHINGTON: US payrolls growth got back on track in August, consistent with general steadiness in the labour market that’s helping the Federal Reserve (Fed) focus more intently on its battle with inflation. 

Economists estimate the monthly jobs report from the Bureau of Labour Statistics (BLS) this coming Friday will show a 55,000 increase in payrolls after an unexpected dip in July employment. Such a result would be broadly in line with average job growth this year.

The unemployment rate, based on a survey of households rather than establishments, is seen holding at 4.1%. 

Steady labor demand combined with limited layoffs are “consistent with full employment”, Fed chairman Kevin Warsh (pic) said last Friday at the US central bank’s annual conference in Wyoming.

The stable job market has fuelled consumer spending and allowed the broader economy to forge ahead.

With employment growth continuing, Fed officials are zeroing in on price stability – the other half of the central bank’s dual mandate. Inflation has been holding well above the Fed’s 2% goal for years.

The jobs report will cap a busy week on the US economic data calendar, including the BLS’s July job openings and labour turnover survey tomorrow. 

“Warsh’s hawkish Jackson Hole speech raised the odds of a rate hike in September, and changed how the coming week’s data should be read.

“August’s jobs report remains the headline release, but the lackluster showing we expect may be less consequential than normal. Warsh portrayed the labour market as in good health and pointed out that softer job gains are often a matter of demographics, not an economy in decline,” said Bloomberg Economics analysts Anna Wong, Andrew Sacher and Eliza Winger.

In light of Warsh’s comments, which were enough to boost the prospects for an interest-rate hike at the Fed’s September policy meeting above 50%, investors will seek clues about inflation from a pair of industry reports in the coming week. 

The Institute for Supply Management will release its manufacturing survey tomorrow, followed by the services version on Thursday. Both include measures of prices paid for materials. 

Canada has a busy week in store, too, with a Bank of Canada rate decision Wednesday – no change is anticipated – followed by international trade data Thursday and labour market numbers on Friday. 

Tariffs poser

Looming over it all is the acrimonious collapse of Canada-US trade talks and new tariffs on the way from both sides. There’s no sign of negotiations resuming any time soon. 

Elsewhere, a pickup in eurozone inflation, a possible rate increase in New Zealand, and a gathering of Group of 20 finance ministers in Asheville, North Carolina, may be among the highlights.

Central bank decisions from New Zealand and Malaysia will take centre stage as policymakers assess the fallout from the Middle East crisis, renewed tariff tensions, and an uneven regional growth picture increasingly shaped by the artificial-intelligence boom.

The Reserve Bank of New Zealand could make another round of monetary tightening this Wednesday as the fuel shock continues to feed through to the economy.

But sluggish demand – employment, retail sales, mortgage lending are softening – may give policymakers some pause.

Bank Negara Malaysia follows on Thursday and is likely to stand pat. Malaysia has been one of the region’s outperformers, with energy subsidies keeping inflation subdued and a booming AI sector spurring robust economic growth.

Others in Asia are more vulnerable as uncertainty over a US-Iran peace deal keeps the threat of elevated energy costs alive.

South Korea and the Philippines, both heavy importers of oil, will report inflation data on Wednesday and Friday, respectively.

Meanwhile, India releases second-quarter gross domestic product today (GDP). Growth is expected to dip slightly while still coming in at a strong 7.3%, with consumption and services holding up despite price pressures. 

Australia’s GDP data comes on Wednesday, with higher rates and a deepening housing downturn weighing on growth.

Lastly, factory gauges will be another snapshot of the region’s economic health.

China kicks off the week with official purchasing managers’ index (PMI) today, followed by a broad sweep of August factory surveys tomorrow across Japan, South Korea, Indonesia, Malaysia, the Philippines, Thailand and Taiwan. China’s RatingDog manufacturing PMI is also due.

The readings will provide a snapshot of how Asian manufacturers are coping with the reemergence of tariff tensions, even as AI-related demand continues to buoy parts of the region. South Korea’s August exports will be an important barometer of the technology cycle, particularly semiconductor demand.

Europe in focus

Eurozone inflation probably surged in August to the fastest pace since 2023, keeping up pressure on policymakers to raise rates. Consumer prices probably climbed 3.3% from a year earlier, according to the median of 31 forecasts for data due tomorrow.

Those outcomes follow data last Friday showing Spanish inflation surged to more than double the European Central Bank’s (ECB) 2% target, while France’s reading exceeded expectations as well. 

Germany will kick off the flurry of data today, with annual price increases forecast at 3.1%, the fastest since early 2024. Italy’s result tomorrow is anticipated at 3.4%, which would be the highest there in almost three years.

Also in Germany, factory orders for July come out on Friday, and economists predict a third month of gains. 

Few appearances are planned by ECB policymakers, and after Wednesday they enter a pre-decision quiet period before their meeting the following week. 

Switzerland’s latest inflation report is due on Thursday, with a mild pickup to 0.5% forecast by economists. That’s still well within the 0% to 2% range targeted by the Swiss National Bank, and below its forecast for the current quarter.

In the UK, Bank of England governor Andrew Bailey speaks in London on Friday, while his institution’s Decision Maker Panel report featuring companies’ inflation expectations comes out the same day. 

In the Middle East, data today is expected to show Turkiye’s economy expanded in the second quarter by 2.5% from a year earlier and by 1% on a quarterly basis, signalling a robust recovery despite high rates.

On Thursday, Turkish inflation is forecast to have eased to 31.6% in August, while the monthly rate may fall below 2%.

The releases precede the central bank’s Sept 10 rate decision, when policymakers may consider another cut in borrowing costs.

In Israel, the central bank may deliver a third consecutive rate cut tomorrow, to 3.25%. Still, some economists see the case for a pause. Citigroup argues that “in the absence of any urgency”, policymakers may opt to keep rates unchanged. 

Brazil will be a regional focus with fresh economic data, including a second quarter gross domestic product print ahead of its tightly contested October election. 

Tomorrow’s GDP figures are expected to show Latin America’s largest economy having lost some momentum in the second quarter as double-digit rates weigh on growth. 

Bloomberg Economics forecasts a 0.4% quarterly advance, a reading that may bolster the case for another rate cut in September after inflation eased into the target range early this month.

But it would also provide a warning to President Luiz Inacio Lula da Silva, whose efforts to stimulate the economy are faltering in the midst of his reelection bid. — Bloomberg